The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About it

by Paul Collier

Oxford University Press £16.99, pp205

In the summer of 2005, it all seemed so simple: tens of thousands of well-intentioned campaigners waggled their white wristbands at Live8 and Bono and Bob Geldof urged the world's richest countries to 'Make Poverty History' by pouring cash into Africa. But according to this powerful book, aid alone will never be enough. If the 'bottom billion', the world's poorest people, are to spring the traps that have kept their economies stagnant for decades, Western governments will have to offer much more than money. In some cases, Paul Collier argues, we may have to send in troops to support democratic regimes, as Britain did in Sierra Leone in 2000, to assist the fragile process of economic development.

For people in the bottom billion, life is getting worse, not better. During the Nineties, while globalisation lifted millions out of poverty in China and India, the income of the bottom billion actually fell, by 5 per cent. 'The countries at the bottom coexist with the 21st century, but their reality is the 14th century: civil war, plague, ignorance,' Collier says. He has spent decades studying what makes countries win or lose the struggle to escape poverty and the book is peppered with the findings of a lifetime's technical research. But this is a deliberately populist, polemical volume, aimed at concerned citizens, not fellow number-crunchers.

As an economist, Collier's call to arms is founded on hard-headed cost-benefit analysis, not post-colonial guilt or emotional hand-wringing. He calculates, for example, that the cost of a badly governed 'failing state' to itself and its neighbours in lost economic growth is a staggering $100bn. On that basis, spending a few million on parachuting in skilled administrators to support the government, bankrolling infrastructure projects or even sending in troops to put down an incipient coup looks like a bargain.

His findings overturn some of the most persistent myths about Africa's decades of failure. The continent's history of repeated coups d'etat and civil wars is not caused by a uniquely fractious populace or especially poor politicians, for example, but by poverty. On average, all low-income countries face a 14 per cent chance of falling into civil war in any five-year period; as Collier notes: 'Young men, who are the recruits for rebel armies, come pretty cheap in an environment of hopeless poverty. Joining a rebel movement gives these young men a small chance of riches.'

Conflict is one of four 'poverty traps' that the bottom billion will be unable to escape without our help. The other three are being landlocked, especially when the neighbouring countries are also poor; abundant natural resources; and bad governance. Switzerland is landlocked, but it has the giant markets of Germany and Italy on its doorstep and is able to sell goods to their rich consumers. Uganda, by contrast, has as neighbours, among others, wartorn Sudan and the failed state of Somalia. Abundant natural resources sound like an economic boon. But instead of bringing wealth trickling down to the poorest, the discovery of oil, copper or diamonds encourages corrupt politicians to seize power in order to divide the spoils and makes economies vulnerable to see-sawing world commodity prices.

The fourth trap, bad governance, is one for which Africa has become notorious. For countries lucky enough to be on the coast, with a large workforce, governance doesn't matter too much; as long as the state doesn't get in the way, export growth can take off. For smaller, landlocked countries, dependent on aid-flows or natural resource revenues, governance is critical. A study in Chad showed that of the cash earmarked by the government for spending on health, 99 per cent had disappeared before it even reached hospitals.

Collier says we must tackle these four poverty traps directly. Landlocked countries will need long-term aid because they are at a huge geographical disadvantage, but we should also be channelling cash to their neighbours to build effective infrastructure links. And the countries of the bottom billion will have to be given preferential access to the global marketplace if they are ever to compete with the export powerhouses of China and India.

Collier also targets what he calls the 'headless heart' - well-meaning but misguided campaigners who unthinkingly oppose measures such as cutting trade barriers, attaching tough conditions to aid or sending in troops, which could actually help the poorest countries. Eventually, we will have to take a stand: 'The politics of the bottom billion is not the bland and sedate process of the rich democracies but rather a dangerous contest between moral extremes. The struggle for the future of the bottom billion is not a contest between an evil rich world and a noble poor world. It is within the societies of the bottom billion.' The real solutions to the struggles of the world's poorest people are more complex, and harder to sell to enthusiastic campaigners, than the aid-solves-everything, 'Make Poverty History' approach.

This important book wants citizens of G8 countries to fight for change. Unfortunately, you can't fit 'a new international charter on post-civil war reconstruction' or 'tariff-free access to rich-country markets' on a plastic wristband.